BREAKING NEWS: The District Court for the Southern District of New York has today ruled that Tiffany’s false advertising claim against eBay has failed. Judge Richard Sullivan issued a seven page order to address whether certain of eBay’s advertisements were likely to mislead or confuse consumers, after all other aspects of Tiffany’s appeal against his 2008 decision had been dismissed by the Second Circuit in April 2010.

Tiffany’s remanded claim rested on section 43(a)(1)(B) Lanham Act, which forbids any false or misleading descriptions or representations of fact concerning “the nature, characteristics, qualities, or geographic origin of … goods, services or commercial activities” (15 U.S.C. § 1125(a)(1)(B)). This can be proved in one of two ways: either the claims are literally false; or they are likely to mislead or confuse customers. (Tiffany (NJ), Inc. v. eBay, Inc., 600 F.3d 112, quoting Time Warner Cable, Inc. v. DIRECTV, Inc., 497 F.3d 114, 153 (2d Cir. 2007)).Since the claims in this case were not literally false, Tiffany had to “demonstrate, by extrinsic evidence that the challenged commercials tend to mislead or confuse consumers” and that “a statistically significant part of the commercial audience holds the false belief allegedly communicated by the challenegd advertisement” (Tiffany, 600 F.3d at 112-113, quoting Johnson & Johnson, Merck Pharm. Co. v. Smithkline Beecham Corp., 960 F.2d 294, 297, 98 (2d Cir. 1992)). It was “for the limited purpose of the District Court’s re-examination of the false advertising claim” that the Second Circuit had remanded the case to the District Court.Denying Tiffany’s petition, Judge Sullivan stated:

“For the reasons that follow, and by Plaintiff’s own admission, the Court concludes that there is insufficient evidence in the extensive trial record to support a finding that the challenged advertisements were misleading or confusing. The Court further rejects Plaintiff’s post-appeal argument that the limited remand from the Circuit left open alternative theories of liability under the Lanham Act.” (Internal quotations omitted.)

The Order shows that although the evidence presented by Tiffany demonstrated confusion on the part of at least some consumers, there was no evidence of their statistical significance and no proof that they had been confused by the advertising at the center of Tiffany’s complaint. In fact, the testimonies of Tiffany’s witnesses seemed to indicate the opposite, i.e. that the “Tiffany on eBay” advertising had played no part in their confusion.

Finally, Tiffany argued that its false advertising claim could succeed where it could adequately demonstrate that eBay had “intentionally set out to deceive the public”, and that eBay’s “deliberate conduct in this regard is of an egregious nature” (Merck 960 F.2d at 298). Judge Sullivan rejected this argument for two reasons. First, it was not raised until after the Second Circuit had remanded the false advertising issue back to the District Court, and therefore it was not admissible. Second, even if it had been admissible, “nothing in the trial record indicates that eBay was aware [this is what the Order says, but should it say “intended”?] that consumers were being misled by eBay advertisements”.

This decision does not create new law. It is unlikely to surprise many and is even less likely to have any significant impact on brand protection policies, given that the suit was filed in response to eBay’s 2004 practices. Internet service providers have evolved significantly since then and currently offer a variety of rights protection programs that seem to be helping them survive lawsuits quite well. Even if online businesses, including auction houses, will have no reason to change their current practices as a result of today’s ruling, brand owners will always be well advised to bear in mind that working with ISPs to tackle counterfeiting will often be a cost-effective alternative to litigation.

The Second Circuit Court of Appeals has just released its long-awaited decision in the ongoing Tiffany vs. eBay litigation in New York. Put briefly, Tiffany’s appeal has been rejected except insofar as the claim for false advertising has been sent back down to the District Court. There is talk of Tiffany appealing all the way to the Supreme Court, but I don’t know of any official statement on that front yet.

I’m taking a quick break from the busyness of 5th Avenue, New York City, to stop into Barnes & Noble and have a look around for any new reference materials. After making my way through a large group of tourists, complete with large backpacks and umbrellas, I found what I was looking for: books relating to legal aspects of IP/IT and the Internet, all neatly situated between the sections dealing with US history and Computers.

Most people, I’m sure, would think nothing of this, but for me the placement of these books was interesting. Just like at Barnes & Noble, IP law occupies a special place in today’s world, trying to bridge the gap between the old and the new, our understanding of the past and our expectations of what the future will be like. Like most other laws it stands on traditions and theories accepted in the world’s greatest legislatures, but, perhaps unlike most other branches of law, it must also adapt to the fast-changing challenges of the technological revolution that began in the 20th century with, in particular, the advent of the home computer, personal media devices and the world wide web.

Does it do a good job? Is information technology ever static long enough for us to assess not just the short term but also the long term value of a statute or a case, (e.g. would State Street be decided the same today? We may get an answer to that once In re: Bilski (renamed Bilski vs. Doll) is heard by the US Supreme Court in November)? Knowing how quickly technology is changing nowadays, should we even bother to pay attention to long term goals? If there is to be any certainty for brand owners, just how willing should the judiciary and the legislature be to re-interpret existing laws or create new laws in response to prevalent business practices, particularly where those practices purport to offer short term consumer benefits (e.g. Google’s AdWords program, or safe harbor provisions which come into play when counterfeiters sell items on eBay)? Have we found the balance between too little protection (as some say is the case in Europe, where inventions for computer programs as such are not patentable, leaving code to be protected by Europe’s (strong) copyright laws alone) and too much protection (e.g. as others say is the case in the US, where both patent and copyright protection is, in principle, available to computer programs which on their face do not seem to be particularly inventive or novel)?

Most people with any interest in thes areas, whether informed or not, have formed some sort of conclusion on these questions. The challenge for IP is to find that elusive happy medium between respecting the essential ancient elements of our judicial systems which have seen us well so far, and not shying away from breaking with tradition when that is what is needed.

But, of course, different groups “need” different things, so the happy medium is likely to remain elusive.

It’s been long enough since I last blogged, so I have uploaded WordPress to my site and am going to give it another go. And there’s plenty to write about, especially in New York, from the ambitious Authors Guild vs. Google Book Settlement hearing taking place on 7 October to the recent Appeal in the Tiffany vs. eBay. Elsewhere, Skype has filed suit against eBay, Advocate-General Poiares Maduro has opined that Google’s unilateral offering and sale of trademarks (in this instance of LVMH (Louis Vuitton)) for commercial use in its AdWords program is not always going to infringe the third party trademarks, and questions on LinkedIn concerning ISP and blogger liability abound. Clearly this is an exciting time to have anything to do with IP law.

Where do I fit into all this? I am an IP / IT litigator, and know that what is said in these cases will have enormous impact on the way business is done in the future. The value of IP to businesses cannot be underestimated and, when we are all seeking new ways to deliver value while remaining profitable, serious long- and short-term questions about brand protection will be creating not just headaches, but also the possibility of renewed and closer relationships for many lawyers and their clients. Rather than seeing the economic downturn as hindering legal services, it is an opportunity for lawyers to demonstrate their understanding of their clients’ businesses and commercial objectives, and to come up with creative ways of achieving those objectives far more economically than their competitors. Lawyers able to do that will reap the rewards in the medium- and long-term: those who cannot will be priced out of the market, with probably few tears being shed.